Business Overview

Thailand is one of the important economies in Southeast Asia. It has a diverse economic structure and resources. GDP growth rates are stable, largely dependent on manufacturing, exports, and service industries.

Thailand is the second largest economy in Southeast Asia. with GDP per capita approx. 6,600 US Dollar It is a middle to high income country. Private consumption and international trade are the main components of GDP of the country Total government debt accounts for only 40% of GDP Thailand has a population of almost 70 million people ( ranked 4 Among the 6 countries in Southeast Asia ) and the average population is 37 year which is ranked highest among 6 Southeast Asian countries This shows that Thailand is facing the problem of a declining demographic dividend .

In terms of production GDP in Thailand Agriculture is considered 8% industry accounted for 32% and the service industry accounted for 60% among various industries Manufacturing accounts for the largest share ( 80%) and in service industries. Retail and wholesale trade ( 25%) and finance and insurance ( 15%) account for the largest proportions. Thailand’s rich cultural resources also promote the development of Thailand’s tourism industry. which is expected to have a proportion of approximately 18% of GDP

in the field of foreign investment Thailand’s foreign direct investment continues to grow. namely Japan ( 35%), EU ( 15%) and Singapore ( 14%). The funds are mainly invested in the manufacturing ( 45%) and financial and insurance ( 25%) industries , with the largest manufacturing sector being parts. Cars and repairs ( calculated as 22% of the manufacturing industry ) and Japan has the largest investment in this investment project.

Overview of the investment environment

2.1 Geographic location advantage As the center of Southeast Asia Thailand connects many economies to facilitate cross-border trade and transportation ( insert picture )

2.2 Government support and policy environment : The Thai government promotes foreign investment and provides a variety of incentives and supportive policies.

2.2.1. Incentives from the Office of the Board of Investment ( BOI )

BOI offers various incentives to foreign investors including :

Tax benefits : Exemption from corporate income tax for 3-13 years. Exemption or reduction of import duties on machinery and raw materials. and additional tax exemptions for infrastructure construction and installation.

Non-Tax Incentives : Land Ownership by Foreign Entities. Visa and work permit facilities for foreign employees and allowing the importation of experts and skilled workers.

2.2.2. Eastern Economic Corridor (EEC)

The EEC is a key economic zone aimed at transforming Thailand into a high-tech economy. It has :

• Enhanced Incentives : Similar to BOI incentives but with additional benefits for targeted industries such as aerospace, robotics, digital, medical and biotechnology.
• Infrastructure Development : Important investments in transportation, logistics and utilities. to support industrial activities Including a new airport, port and high-speed rail line.

2.2.3. Smart Visa Program

To attract technology professionals, investors, executives and entrepreneurs in targeted industries, the Smart Visa program offers :

• Extended visa validity : up to 4 years, no work permit required
• Family Reunification : Spouses and children are allowed to live and work in Thailand.
• Easy processing : Streamlined application process and fast service.

2.2.4. Special Economic Zone (SEZ)

Special economic zones have been established in border areas to promote regional development and cross-border trade. Investors in these areas can receive the following benefits :

• Tax exemption : Same as specified by BOI.
• Reduce regulatory burden : Simplify customs procedures and reduce import and export taxes.
• Infrastructure support : Developing necessary infrastructure such as roads, utilities, and logistics facilities.

2.2.5. Infrastructure investment

The Thai government is investing heavily in infrastructure projects to improve connectivity and support industrial activities, including :

• Transportation infrastructure : airport expansion development of high speed trains and improve the road network
• Digital infrastructure : Improve internet connectivity and promote the adoption of digital technology in business operations.

2.2.6. Business facilitation reform

Thailand has implemented a number of reforms to make it easier for businesses to conduct business, such as :

• Simplified Business Registration : Simplify the process of registering a company and obtaining a license.
• Regulatory reform : Reduce bureaucratic red tape and increase transparency in the regulatory process.
• Support Services : Provides a full range of investor services to facilitate the establishment and operation of organizations.

Complete Infrastructure : Advanced transportation network and communications infrastructure to support business activities and manufacturing operations.

3. Main investment areas

3.1 Real estate and construction : Thailand’s real estate market is open to foreign investors and attracts large capital inflows.

Thailand’s real estate market is open to foreign investors and attracts large capital inflows. The Thai construction industry is set to perform well in 2023 despite some volatility. Construction industry GDP reached 68.83 billion baht in the fourth quarter of 2023 but declined to 62.909 billion baht in the first quarter of 2024 ( Deloitte United States ). Investment in real estate and construction continues to grow, benefiting from government policies to promote infrastructure projects.

3.2 Tourism and service industry

Tourism, financial services and education services have always been a key driver of Thailand’s economy. In 2023, Thailand’s tourism industry will recover rapidly and is expected to welcome approximately 22 million international tourists ( Deloitte USA ). The overall service industry will account for 57% of GDP in 2021, and the recovery of tourism has given the industry new energy, especially in the aftermath of the pandemic ( FocusEconomics ).

3.3 Production and export :

Manufacturing sectors such as electronics and auto parts attract a lot of investment. Manufacturing and exports play a major role in the Thai economy. In 2023, the value added of manufacturing will account for 24.91% of GDP (Deloitte United States ). Industrial goods will account for 72% of total exports in 2022, showing the important position of the industry in Thai exports ( FocusEconomics ). In 2023, Thai exports totaled 285 billion US dollars, demonstrating strong international trade performance ( FocusEconomics ).

4. Laws and Taxes : Thailand’s legal framework and tax policies are favorable to foreign investors.

4.1 Foreign investment laws protect the rights and interests of investors. and allow companies that are 100% foreign-controlled or foreign-owned.

4.1.1. Alien Business Operations Act

Restricted Industries : Foreigners are restricted in certain industries ( e.g. media, agriculture, land sales, etc. ) and are required to obtain special licenses.

Ownership Restrictions : In some industries Foreign ownership cannot exceed 49%.

Exceptions and Exceptions : Subject to certain conditions, such as obtaining permission from the government. Foreign investors receive a higher shareholding ratio ( Deloitte United States) ( FocusEconomics)

4.1.2. Investment Promotion Act

Board of Investment (BOI): BOI provides tax benefits. Non-Tax Incentives land ownership and other support to attract foreign investment

Tax benefits : Including reductions and exemptions from corporate income tax. Tax deductions and tax exemptions for imported equipment, etc.

Non-Tax Benefits : Including owning land. Foreign worker permits, etc. ( Deloitte United States) ( FocusEconomics)

4.1.3. Eastern Special Development Zone (EEC) policy

High technology and innovation : Promote high-tech and innovative industries to be established in the Eastern Economic Corridor. It provides additional tax and non-tax benefits.

Infrastructure support : The government invests in many infrastructure projects, such as high-speed rail. deep sea ports, etc., to support regional development (Deloitte United States )

4.1.4. Industrial Estate Authority of Thailand Act

Industrial Park : With the establishment of an industrial park We have provided infrastructure and facilities for various organizations. and attracting foreign investment enterprises to come and settle.

Set up residences in industrial parks can receive additional tax benefits and administrative support ( FocusEconomics)

4.1.5. Intellectual property law

Intellectual Property Protection : The Thai government attaches great importance to intellectual property protection and provides legal protection to enterprises in the field of patents. Trademarks, copyrights, etc.

in law enforcement Suppress violations of intellectual property rights and protect the interests of investors ( FocusEconomics)

4.1.6. Labor law

Foreign employees : Set employment conditions Work permits, etc. for foreign employees To ensure that foreign-funded organizations can introduce and manage foreign talent smoothly.

Labor Protection : Provide comprehensive labor protection measures to protect workers’ rights and interests. and maintain good relations among workers ( FocusEconomics)

Together, these laws and policies create an important framework for attracting foreign investment to Thailand. Its aim is to create a stable and attractive investment environment for foreign-invested enterprises.

4.2 The tax system is simple and transparent. Covers corporate income tax VAT and personal income tax

The Thai government has implemented a series of tax policies to attract foreign investment and promote economic growth. Here are some of Thailand’s main tax policies :

4.2.1. Corporate income tax

Standard Rate : Thailand’s standard corporate income tax rate is 20%.

Small and Medium Enterprises (SMEs) : For SMEs with registered capital not exceeding 5 million baht and annual income not exceeding 30 million baht, the tax rate may be as low as 15% (Deloitte United States )

4.2.2. Personal income tax

Progressive tax rate : Personal income tax uses a progressive tax rate. This ranges from 5% to 35% depending on the individual’s annual income.

Tax Exemption : Some income may be exempt from taxes, such as insurance compensation and charitable donations ( FocusEconomics ).

4.2.3. Value Added Tax (VAT)

Standard Rate : The standard rate of VAT is 7%.

Exclusions and reductions : Certain goods and services ( such as basic food, medical services, etc.) Educational services ) exempt or reduced from VAT ( Deloitte United States )

4.2.4. Special economic zones

Tax Preferences : Organizations in special economic zones can enjoy various levels of tax preferences, such as reductions and exemptions from corporate income tax. Reduction of import and export taxes, etc.

Target industries : Special economic zones attract high-tech enterprises. Environmentally friendly and innovative (FocusEconomics ) as the main

4.2.5. Other tax benefits

R&D Tax Incentives : Companies can receive tax deductions of up to 200% on eligible R&D expenses .

Green Technology and Renewable Energy : Businesses that invest in green technology and renewable energy projects can enjoy additional tax breaks and incentives (Deloitte United States ) ( FocusEconomics)

4.2.6. Double taxation agreement

Thailand has signed double tax treaties with many countries to prevent companies and individuals from being double taxed due to cross-border operations. These treaties provide tax credits and exemptions and reduce international tax burdens ( FocusEconomics).

5. Analysis of successful cases

In 2024, Chinese giants announced several major investments in Thailand. which reflects a strong commitment to various sectors especially electric vehicles (EV) and electronics Here are some notable examples :

5.1. ZYNP Corporation 5.1. ZYNP Corporation : Manufacturer of internal combustion engine parts from Henan Province, China, is investing approximately USD 29.56 million. To create a production base in Thailand

5.2. Circuit Fabology Microelectronics Equipment Co 5.2. Circuit Fabology Microelectronics Equipment Co .: This printed circuit board (PCB) company from Anhui Province invested approximately US$ 14.1 million to establish a branch, acquire land and build a factory in Thailand.

5.3 . BYD และ Great Wall Motors 5.3 . BYD and Great Wall Motors : These Chinese electric car manufacturers have committed to investing heavily in Thailand with the goal of making the country a regional electric car manufacturing hub. For example, BYD will start production in Thailand. Thailand this year, which plays an important role in the local electric car market.

5.4 . Changan Automobile 5.4 . Changan Automobile : Chinese car manufacturer receives approval. Electric vehicle project worth 8.86 billion baht ( US$ 257 million ) which will further promote the Thai automotive industry.

6. Risks and Challenges

• Political instability : The political environment in Thailand can be unstable, which may affect the investment environment.
• Market Competition : There is intense market competition in some areas, especially in the manufacturing and service industries.
• Cultural Differences : Understanding and adapting to Thai culture and business practices is critical to investment success.

7. Investment strategies and recommendations

• Study the market and understand the potential and risks of your target industry.
• Find the right local partner or consultant to help understand the local market and regulations.
• Develop a long-term investment strategy that takes into account market entry and exit strategies.

8. Contact information and resources

JUEN WECHAT
WECHAT
Mail: Robcoco2022@gmail.com